India’s economy remains strong and resilient amid geopolitical challenges, tight economic scenarios pressured by high inflation, and the ongoing war in Ukraine. In September, the manufacturing PMI remained robust, clocking in at 57.5 against 58.6 in August.
The latest BCG study on global manufacturing shifts, “Harnessing the Tectonic Shifts in Global Manufacturing,” indicates India emerged as one of the winners in global manufacturing over the past five years, with its exports to the United States surging by $23 billion, a 44% increase from 2018 to 2022. In the study, researchers noted manufacturing and sourcing shifts had occurred in various industries as global companies rethought their manufacturing and sourcing strategies due to trade wars, the pandemic, geopolitical tensions, and supply bottlenecks. Exports of Indian auto components to the United States rose by 65%; semiconductor and material shipments rose by 143%; and mechanical machinery exports grew by 70%. Overall, importing from India worked out 15% cheaper for the United States, while the most recent research by the IMARC group valued India’s lithium-ion market at $2.5 billion and expected it to grow to $5.9 billion by 2028 at a CAGR of 14.8% for the period.
India will establish itself as a major player in the global supply chain for renewable energy equipment and start exporting, as its solar manufacturing capacity will reach 100 GW by 2026. With an investment of $2.88 billion, the government is putting into place a production-linked incentive scheme that would help establish 48 GW of solar equipment manufacturing capacity by 2026.
Reliance Industries is planning to expand into the wind power equipment business. The company will partner with global leaders in this segment. It is building a carbon fiber plant in Gujarat to reduce raw-material expenses for blades. Besides wind turbine manufacturing, the oil and gas explorer will harness its experience working in deep-water fields to build offshore wind projects.
A few recently announced projects and investment news items are listed below:
Tesla is discussing and planning to set up a new electric vehicle factory in India. Apart from the vehicle plant, it also draws plans to make and sell battery storage systems in the country. The company is also planning to source $1.9 billion worth of auto parts from India.
Vietnamese EV maker Vin Fast is considering setting up a manufacturing unit in India.
Constrained by the existing capacity to meet the increased demand and forecast, Toyota plans to set up its third car plant to increase its current capacity by 30%. The plant would be built with an initial capacity of 80,000-120,000 vehicles a year and could be enhanced to 200,000 over time.
Tata Projects has partnered with Micron Technology to construct an advanced semiconductor assembly and test plant in Sanand, Gujarat.
Tata Power Solar is setting up a new green field 4.3 GW solar cell and module manufacturing facility in Tamil Nadu. Additionally, Tata Power Renewable is also establishing a 41 MW captive solar plant at the same location in Tamil Nadu. The captive solar plant is expected to generate 101 million units of electricity and offset around 72,000 tons of carbon dioxide emissions annually.
MG Motors plans to set up its second manufacturing plant in India. Presently, the company has a manufacturing plant located in Gujarat with a capacity of 120,000 vehicles per year. Additionally, the company is evaluating the construction of a battery assembly plant adjacent to its existing plant, with the aim to reduce reliance on EV batteries sourced by China.
Nidec Motion & Energy India did a groundbreaking of its greenfield project in Karnataka. The company intends to invest around $55 million. The proposed plant will be the largest of the company’s eight facilities in India.Top Taiwanese laptop maker Asus is moving its key supplier from China to India. The company will collaborate with contract manufacturer Flex to establish a new factory in Chennai, taking advantage of the government’s production-linked incentive scheme for IT hardware. IPhone maker Foxconn plans to double its investment and employment in India.
For more information, please contact Arun Mahajan at AMahajan@AMTonline.org.